From the Harvard Business Review: Prevent Negativity from Taking Over Your Team

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Prevent Negativity from Taking Over Your Team
As a manager, you need to constantly be taking the pulse of your team’s collective emotions—whether they’re frustrated with a new strategic direction, anxious about a leadership transition, or upset because of recent layoffs. How can you prevent these negative emotional dynamics from festering on your team? First, to the extent that you’re able, modify the situation that’s at the source of the negativity, and express to your employees that you recognized their collective emotion and made a change. At the same time, reappraise the underlying situation that’s brought on the negative energy. Can you reframe it in a way that inspires hope and positivity? Next, galvanize your team by returning its focus to a collective goal or priority. Finally, practice “response modulation.” This involves controlling your outward expression of your own emotional experience in order to set the tone for others. Your employees are looking to you as a signal of what they should feel. If you maintain a positive and authentic posture in response to a challenging situation, you can positively influence the group’s collective emotion.
This tip is adapted from “Managing Your Team’s Emotional Dynamic,” by Amit Goldenberg

NO GUTS, NO GLORY.  WHAT IS YOUR RATE REVIEW STRATEGY?

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To say we are in unprecedented times is an understatement.  Pandemic, war, inflation, material shortages, increased fuel cost and labor shortages are just a few of the challenges waste collection company owners and managers are facing every day.

The quote “No Guts, No Glory” was first credited to U.S. Air Force Major General Frederick Corbin Blesse.  Put simply, the saying is a call for people to attack important tasks aggressively.

Blesse stressed that aggressiveness was needed for all involved.   Without aggressiveness, it wouldn’t matter how well-trained any Air Force pilot was. He would let enemy targets slip through his fingers.  The saying has applications for both the military and everyday usage.  In the military, it helps to have accurate information so certain targets can be attacked quickly and efficiently.  In business, it helps to attack the challenges that face your company boldly and with decisive action.  A proactive rate review program must be a structured, regular, periodic activity championed by company leadership and communicated to all team members.

Since 2000, the average inflation rate in the USA has been 2.38% per year.  Over twenty years, this has produced a cumulative price increase of 67.89%!   This means that today’s prices are 1.68 times higher than average prices since 2000, according to the Bureau of Labor Statistics consumer price index.  According to Kiplinger, the forecast for 2022 inflation will be 6.3%, well over double the average of the last 20 years.  A 6.3% (or more) increase in operational costs will erase much of your company profit if left unattended.

In the past, a small company could outpace relatively low inflation simply by growing their business aggressively.  The mistake that most small businesses make is they don’t pay attention to the margin between revenue and expenses.  As a company grows, cash flow should increase but if your net profit is decreasing as a percentage of your top line revenue, you are actually going backwards!

A careful and complete study of your costs will provide an idea what your rates adjustment should be.  Compare your profit margin from pre-pandemic 2019 to 2021 and year to date 2022.  What do you see?

Don’t fall into the trap of “I can’t raise my rates, I’ll lose all of my customers!”  Better to lose some customers than your business!  Every month or quarter you delay a rate increase, you are experiencing lost opportunity (and profit).

So remember, “No Guts, No Glory” !  Be courageous when it comes time to adjust rates, and make sure your quality of service justifies your increase.    Be intentional about tracking your operating costs.  Make sure your rates provide a comfortable profit margin.

Need a strategy regarding rate adjustments and discipline?  Call us!

jvt@vantholenassociates.com

#afriendinthebusiness

CRAZY TIMES IN VEGAS, BABY!

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WasteExpo is happening next week in Las Vegas, NV.   This annual gathering of waste professionals from across the world always provides a great time to get away and get a new perspective on our industry.

But many will say their biggest purpose in going to Vegas is the partying.  After all, “What Happens in Vegas, stays in Vegas”, right?   While having fun is certainly important, the value you go home with is much greater than winning (?) at the craps table.

I attended my first WasteExpo in 1968 (I was very young), and I still walk around the show floor in amazement at the shiny trucks like I did so long ago.   But, I now have a whole different perspective when I realize the cost of these glittering works of art, and the complexity involved in getting materials picked up at the curb and recycled, landfilled or incinerated.

Besides the lights, the give-aways, the food and drink, here are few things to consider as you spend time at WasteExpo:

Visit with vendors. An obvious one. Ask questions. Open your mind to new ways of doing things.  Don’t be blindly loyal to just one make or model of truck, compactor or container, but weigh carefully the advantages offered by the alternatives.

Visit the big company’s booths.  Talk to them, ask questions, get some insight in the way they do business.  Who knows, you may get invited to their private parties!  I remember seeing the Doobie Brothers and REO Speedwagon at WasteExpo in years past!

Visit with old friends.  Look for the folks you’ve passed along the way  in your career.  See what they are up to.  Grab a drink and learn something new.  Seek out your competitors and get to know them on an entirely different level.  Today’s competitors can become tomorrow’s friends!

Make new friends.  Don’t be bashful!  Introduce yourself to people looking at the same products you are.  Ask questions about their business, you may find some great ideas from someone across the state or across the country facing the same challenges you are.

Take in a conference session or two, or ten!   It may be hard to sit inside a building all day while its sunny and warm outside, learning about the latest trends in the industry, the newest technology, the best way to manage employees, these are all topics you will hear discussed.  Get the most of your investment by hearing from some of the best minds in the industry.

So, if you come for the gambling, OK.  But you can leave a winner if you have a plan and organize your time and attend WasteExpo in an intentional manner.  And make sure, What Happens in Vegas DOESN’T Stay in Vegas!  Bring home some solid ideas to improve your business!

 

What Every Waste Company Needs.

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What Every Waste Company Needs.

Communications

  • Develop a strong, consistent brand.
  • Communicate the company Mission Statement to customers, community, and employees in a clear and concise manner.
  • Have a concise message to customers, team members and the community.
  • Commercial Service Agreement that is fair and easy to understand
  • Website maintenance
  • Social media monitor and responsiveness
  • Sales and Marketing

Operations

  • Emergency Response Plan
  • DOT driver qualification files
  • DOT driver alcohol and controlled substance files
  • DOT substance abuse testing
  • Separate personnel (non – DOT) files for each driver
  • Regular driver’s / safety meetings, complete with meeting agendas and attendance documentation
  • Operations Safety Manual
  • Light Duty / Return to Work Program
  • Inventory control of carts and containers
  • Identify and track operational KPI’s (Key Performance Indicators)
    • Lifts per hour.
    • Lifts per mile.
    • Miles per gallon.

 

Fleet Management

  • Pre- and Post-trip inspection procedure
  • Preventative maintenance schedule
  • DOT annual inspection schedule
  • Truck spec files for each vehicle
  • Maintenance files for each vehicle
  • Shop Safety Manual.
  • Identify and track fleet KPI’s (Key Performance Indicators)
    • Preventable road calls.
    • Trucks are serviced when they are scheduled.
    • Repair costs per unit.
  • Have a Predictive Maintenance mindset.
  • Parts inventory control and ordering system.

 

Administration

  • Employee Handbook.
  • Identify and track financial KPI’s (Key Performance Indicators).
    • Monthly billing totals by type.
  • Company Calendar, what gets done when, billing, collections,
  • Procedures manual.

 

Leadership

  • Provide and communicate a culture that is transparent and reflective of the company’s Values, Mission and Vision
  • Core Values – What makes us uniquely us.
  • Mission Statement – What we do and how and why we do it.
  • Vision Statement – Where we are going.
  • Goal setting in the other 4 areas.
  • Industry and Government relations and involvement by City, County, State, Region
  • Financial responsibility as it regards pricing, vendor relationships.
  • Exit / Succession plan

Cost increases are coming — your rates need to reflect that sooner than later

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From Overdrive magazine, a great article about the need to have your rates reflect the true cost of operations.

 

Cost increases are coming — your rates need to reflect that sooner than later

Is a PAYT (Pay As You Throw) program in your future?

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A Pay As You Throw (PAYT) program has been a topic that has come and gone and come back in the world of residential waste service.  The system is fairly simple, where a customer purchases bags at a per bag price from their hauler, or has a choice of cart size varying in price based on the cart size.  The idea is that your waste disposal cost is relative to the amount of waste you need to be disposed of.

In my history, we used this type of system to cater to senior citizens who did not generate high volumes of trash.  This was also a popular program in rural areas where residents are more likely to burn their trash.  Later, as recycling became popular, PAYT became an incentive to divert materials from more expensive disposal into “cheaper” recycling.  Unfortunately in most areas, those economics don’t work any longer, unless there is some subsidy or other market influencer making recycling cheaper.

When we’ve done the PAYT by-the-bag program, we called them Budget Bags.  We first used bags, then switched to tags (Budget Tags) so we could eliminate the inventory problem and be able to mail tags to customers. We charged $3.50 per tag in sets of 10, plus a $3.50 mailing fee. We sent them guaranteed delivery so people could not claim they did not receive them. We only provided this service if we were already passing your house.

While this list is not exhaustive, here are some props and cons to having a PAYT system:

PROS:
• Nice market niche. Provided a nice “PAYT” (Pay As You Throw”) alternative, which got us points with local government, helped encourage recycling and a way to differentiate from our competitors.
• Popular with senior citizens.
• Little investment.
• Worked well with serious recyclers.
• Cash up front.

CONS:
• Required hand loading. We were working on modifying this service on routes we were converting to ASL.
• Some customers abused the weight limit.
• Unless you charged a “route fee”, it did not cover your fixed costs. This is why we only provide this service to customers we were passing already. We considered it “gravy”.
• Customers were willing to pay more for this service, and not have a cart.

 

Have questions about PAYT?  Feel free to contact me, I’d be happy to help!

Service Agreements, What Do You Think?

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Service Agreements

There are few topics that get a robust conversation going among independent haulers more than opinions on using Service Agreements in their business.  We all have horror stories about cell phone, uniform service or other contracts with vendors that create animosity between contractor and customer.  But it doesn’t have to be that way.

I believe a Service Agreement can be a valuable tool for your business, and a bigger part of a well planned sales strategy.  Many of us believe “my service is so good I don’t need a contract!”  That works great, until a well funded national company marches into your town with a team of sales representatives offering rates 50% of what you are charging.  At that point, it may be too late to save your business.  Once they find your customers are unsecured, they will snatch up as much business as quickly as they can.  However, if they find your customers are under some sort of agreement, they may go on to easier pickings.

A Service Agreement doesn’t need to be a weapon to use against your customers, but can be an effective sales tool to make your service more valuable to both your customers and your company.

 

Some reasons Service Agreements can benefit your business:

  • Its good business practice. Setting the terms up front begins the relationship with your customer in an atmosphere of professionalism.  A Service Agreement brings order to the relationship.

 

  • Sets the customer’s and the company’s expectations in writing.

 

  • Provides understanding what payment terms, late fees and service cancellation procedures will be.

 

  • Protects company from liability for property damage. You can document any damage that was present before you began servicing this location, and you can include a damage waiver in the terms and conditions agreeing the access to the service location is safe and adequate for your equipment.

 

  • A well written Service Agreement will specifically exclude waste materials that are hazardous or not allowed to be legally collected by your company. It will also provide environmental liability protection if your customer knowingly or unknowingly disposes of hazardous material in your containers, and an expensive cleanup or remediation is necessary.

 

  • A Service Agreement can specify what type of materials a customer’s rate is based on and what materials are acceptable or not. If the weight or compaction characteristics of a customer’s material changes through the course of your service, you need to be able to adjust their rate.

 

  • Especially in the case of Homeowner’s Associations, municipalities and many non-profit organizations where officers regularly turnover, a Service Agreement memorializes what was agreed to when the relationship began. Trying to remember what was discussed and agreed years earlier with officers who are no longer around is a position that is hard to defend.

 

  • A Service Agreement can provide protection to your company in the event of unforeseen circumstances, such as fluctuating recycling fees, a disposal site closing, a new governmental tax or surcharge or catastrophic fuel cost increases.

 

  • Provides a level of security to your bank or financing institution.  You are more likely to receive funding for equipment at a better rate when you can show your revenue stream is secured with Service Agreements.

 

  • There comes a time when businesses are sold either intentionally or unintentionally. Retirement and illness are just a couple of reasons businesses close or are sold.  Customers under contract have a higher value to a buyer as it provides a better likelihood customers will stick around for a new owner, assuming customer service has been satisfactory and continues to be after a sale.

 

  • Your business deserves to have a commitment from a customer. You may have invested hundreds or thousands of dollars in equipment for them to use at their facility.  Your company is entitled to a return on this investment.

 

 

Some things to consider as you think about using Service Agreements in your business:

  • Design a Service Agreement that gives a customer benefits, like a service guarantee, or rates and increases committed to upfront. Let them know exactly what they can expect.

 

  • Make the term of the Service Agreement flexible. Perhaps a small commercial account can be a 1 year term, a large customer requiring a higher level of investment on the part of the contractor may dictate a 3 or 5 year (or longer) term contract.

 

  • In a sales presentation, make the signing of a Service Agreement a positive experience. Perhaps a gift of appropriate value would be in order to show your appreciation.

 

  • Give serious thought to including or not including a “Right to Compete” and an automatically renewing clause in your agreement. Both of these clauses can have advantages and disadvantages.  These terms are common in the service agreements of large companies, and this may be a place where an independent local company may be able to differentiate themselves from a national company.

 

  • Identify what items in your Service Agreement are negotiable and which are cast in stone.  Be ready to offer a modification to those items that are less important, and to hold firm on those that are more important.

 

  • If your Service Agreements are not auto renewing, use the time of renewal as a time to thank the customer for his past business, ask how the quality of your service has been, then ask for a renewal to continue the relationship.

 

I hope this discussion has been helpful.  Every market is different, and what is common practice in one market may be unacceptable in another.  Be sensitive to your market, but always watch for ways to raise the bar and be a leader among your peers.

If you need assistance in designing a Service Agreement that will be effective in serving both your customers and your company, please feel free to contact us here at Van Tholen & Associates for help.

If you have any comments, please click the “comments” link at the top of the page!

Should I increase my rates?

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A waste hauling business has four primary responsibilities:

  1. To its customers, to provide a good value in service for the rate that is charged,

 

  1. To its employees, to provide a safe, meaningful and respectful work environment for a level of pay that is fair and equitable,

 

  1. To its vendors and its community, to pay its bills and taxes in a timely fashion and according to agreements the company has made,

 

  1. And to its owners, to provide a reasonable profit and return on their investment, and the ability to reinvest in the business.

 

From time to time, there is a need to adjust rates to reflect the increased cost of providing service to our customers.  Disposal, insurance, wages, equipment and other costs increase over time, and a business needs to cover the costs it can no longer absorb.

 

Here are some thoughts to consider regarding rate increases:

  • Long before you increase rates, make sure your service quality is high. Customers will not want to spend more if your service quality is poor.

 

  • Do not apologize for a rate increase. Many of the reasons for a rate increase are out of your control.

 

  • Prepare your staff by providing talking points to defend your rate increase.  Consider giving “good” customers who complain an extra quarter at the old rate to adjust their budgets accordingly, or offer an alternative such as a smaller cart.   Taking calls about a rate increase is never fun.  The reality is the callers are but a very small fraction of your total customer base.  Break the increase down, instead of saying “$1.00 per month”, say “less than $.25 per week”.

 

  • If you offer a discount for paying annually, now might be a good time to convert some quarterly payers to annual payers.

 

  • When explaining a rate increase, highlight the features of the improvements you have made to your business, for example, new hi visibility uniforms or other safety enhancements for your staff or new trucks that emit less pollution. If the reason for the increase is a landfill rate increase, list the ways the landfill protects the environment.

 

  • Small regular increases may be easier for customers to accept than infrequent, larger increases.

 

  • Remember, a dollar from a rate increase falls right to your bottom line. $100.00 from a rate increase requires no additional investment in equipment, no added hourly cost, disposal or fuel cost.

 

  • Yes, there will be pushback from some customers. Usually, these are customers that came for a low price, and would leave you for the next low price or special deal that comes along.

 

  • Have an automatic escalator in contracts that is tied to a percentage, perhaps 3 – 5 % per year. While customers don’t like to see their costs increase, knowing what to expect is helpful for them to make their plans.

 

  • Many times, companies write long explanations as to why they need to increase their rates. Keep your explanation brief and to the point.  Some even raise the rate with a simple one line statement:  “Due to increased costs of doing business, your next invoice may reflect a small increase in your rate.  Thank you for the opportunity to serve you!”  Sometimes, saying less is best.

 

Increasing rates is a necessity.  Watch your costs, and adjust your rates accordingly.   Don’t end up like the hauler in the letter above.  If you would like to leave a comment, click on “comments” at the top of the post.

 

Thanks!

20200124 Out of business letter.